U.S. says failure to form a transitional government represents an "outrage and an insult to their citizens"

WASHINGTON, Aug 11 (Reuters) - The United States on Monday condemned South Sudan's government and rebels for failing to form a transitional government by Sunday's deadline, calling it "an outrage and an insult to their citizens."

At least 10,000 people have been killed since fierce fighting erupted in South Sudan in December, pitting President Salva Kiir's government forces against supporters of Riek Machar, his former deputy and longtime political rival.

In an unusually harsh statement, U.S. Secretary of State John Kerry faulted both sides for their failure to settle their differences and to meet an Aug. 10 deadline to form a transitional national unity government.

"Neither party engaged in peace talks seriously," Kerry, who was traveling in Australia, said in the statement issued in Washington. "We condemn these failures."

The conflict has reopened deep ethnic tensions between Kiir's Dinka and Machar's Nuer, in a country which won independence from Sudan in 2011. Kiir and Machar agreed in May to a ceasefire and to form a transitional government, but little progress has been made.

"This is an outrage and an insult to the people of South Sudan. Their leaders are letting them down again and again," Kerry added. "Peace talks have been on-going in Ethiopia for six months, while the people of South Sudan continue to suffer and the war persists."

Aid agencies say South Sudan could be headed for the worst famine since the mid-1980s, when malnutrition swept through East Africa and killed over a million people. The onset of the rainy season restricts delivery of aid in the vast country of 12 million because it has very few paved roads.

The U.N. Security Council has repeatedly warned South Sudan's warring parties that it is considering imposing sanctions. The United States and the European Union have already imposed sanctions on military leaders on both sides.

Kerry all but urged others, including the Inter-Governmental Authority on Development (IGAD), a regional grouping brokering peace negotiations in Ethiopia, to consider punitive steps, too.

"Regional leaders have previously called for punitive measures if the parties failed to secure peace by the agreed deadline," Kerry said. "I call on IGAD and the African Union to immediately take appropriate action to bring peace to the people of South Sudan." (Reporting by Arshad Mohammed; Editing by Jonathan Oatis)

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